Techniques Of Performance Appraisal

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02 Nov 2017

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Chapter 1

INTRODUCTION

Information Technology(IT) organizations are regarded to be one of the "hot sectors" for investment in India. Indian software services are increasing at a extraordinary pace in terms of both profit and global development of customers. IT Organizations requires the proficient employees. It has been noticed that when employees wish to leave an organization, it is plausible that they engage in deviant behaviors or reduce their efforts for performance. Employee deviance and low performance orientation and citizenship behaviors can not only lead to poor individual performances but also bad for the organization’s overall-well being.With the business of IT Organizations heavily dependent on on-site clients, these behaviors can, in turn, leads to poor customer relationships (Krishnan et al., 2010).

In large organizations, performance appraisal of employees has always been a hectic and complex exercise for the Management and Department of Human and Resources (HRD). On the other hand performance appraisal plays an important and critical role in managing employees effectively, especially in the light of recent economic ups and downs globally, which has compelled both private and public organizations to improve their performances and save resources wherever possible (Armstrong et al., 2006).

Performance Appraisal is used in the organizations to evaluate the effectiveness and efficiency of the employees. The need of performance appraisal arises because every person has a different personality, and different situational, social and psychological traits. It brings out the difference of performance among the employees working in an organization. The development of performance appraisal has four distinct phases. It is called TEAM (Technical, Extended, Appraisal and Maintenance) approach (Kohli et al.,2008).

Different person’s views for employee appraisal are:

From supervisor’s perspective:

It would be helpful to improve the employee’s job performance.

It would be helpful for making administrative decisions about the employee.

From employee’s perspective:

It would probably be an appraisal that would fully capture all the employee has contributed in the job to the employer.

From society’s view:

It would be an appraisal that fairly assesses the employee’s performance and is used justly in the employment situation to make the organization more useful to society (Kondrasuk, 2011).

Employee’s appraisal system not only tells about the performance of employees but it also tells about quality of Human Resource Management functions. The functions of Human Resource Management are recruitment activities and wages. Human Resource Management shows that proper timing and quality realization of employees’ appraisal creates great assets not only for an organization but also for its employees. Each category of employees such as clerical and manually working employees must be appraised so as to compete in the present business environment (Blstkova, 2010).

Performance appraisal is generally done in systematic ways which are as follows:

The supervisors measure the pay of employees and compare it with targets and plans.

The supervisor analyses the factors behind work performances of employees.

The employers are in position to guide the employees for a better performance.

The purpose of performance appraisal are :

Communication

Appraisals need to provide an opportunity for formal two-way communication between management and the employee concerning how the organization feels the employee is performing.

Information for evaluative decisions

Information for evaluative decisions is required by the organization for knowing how employees are performing so that they can take fair and equitable actions with their workforce, to improve organizational productivity.

And Motivation for development

Motivation for development means appraisals can motivate by providing opportunity for employees to improve performance over time.

Personal biases and stereotyping are the two most significant appraisal problems. Others problem include halo error, similarity error, proximity error and attribution error. The process of evaluating employee performance can actually lead to higher levels of job satisfaction and productivity .

There is the difference between the Performance Management and Performance Appraisal i.e. Performance Management identifies measures, manages and develops the performance of people in the organization. It is designed to improve worker performance over time whereas Performance Appraisal is the part of the performance management process that identifies, measures and evaluates the employee’s performance and then discusses that performance with the employee.

Performance should be accurately measured so employees will know where they can improve. Knowing where to improve should lead to training employees to develop new skills to improve. To be an accurate measure of performance, the measure must be valid and reliable, acceptable and feasible, specific, and based on the mission and objectives (Lussier et al., 2012).

1.1 Techniques of performance appraisal:

The various methods and techniques used for performance can be categorized as the following traditional and modern methods:

TRADITIONAL METHODS OF PERFORMANCE APPRAISAL

Essay Appraisal Method

This traditional form of appraisal, also known as "Free Form Method" in which the superior writes a brief narrative describing the employees performance. The description is an evaluation of the performance of any employee based on the extreme behavior and often includes examples and evidences to support the information.

Straight Ranking Method

This is one of the oldest and simplest techniques of performance appraisal. In this method ,the all the employees are ranked from the best to the poorest on the basis of their overall performance.

Paired Comparison Method

A better technique of comparison than the straight ranking method, in this method each employee is compared with every other employee and after all the comparisons, the employees are given the final rankings.

Critical Incident Method

In this method of performance appraisal, the appraiser has to maintain the log of each employee and its behavior. Then the evaluator rates the employee on the basis of critical events and how the employee behaved during those incidents. It includes both negative and positive points

Field Review Method

In this method, a senior member of the HR department or a training officer discusses and interviews the supervisors to evaluate and rate their respective subordinates. This method helps to reduce the superior’s personal bias.

Checklist Method

The rater is given a checklist of descriptions of the behavior of the employees on job. The checklist contains a list of statements on the basis of which the rater describes the on the job performance of the employees.

Sample questions for checklist method:

Does he respect his superiors? Yes No

Does he make mistakes frequently? Yes No

Graphic Rating Scale

In this method, an employee’s quality and quantity of work is assessed in a graphic scale indicating different degrees of a particular trait. The factors taken into consideration include both the personal characteristics and characteristics related to the on the job performance of the employees. For example a trait like Job Knowledge may be judged on the range of average, above average, outstanding or unsatisfactory.

MODERN METHODS OF PERFROMANCE APPRAISAL

Assessment centre

Employees are evaluated over a period of time; say one or three days, by observing their behaviors across a series of selected exercises or work samples. Generally employees are given an assessment similar to the job they would be expected to perform if promoted. The trained evaluators observe and evaluate employees as they perform the assigned jobs and are evaluated on job related characteristics.

Behaviorally Anchor Rating Scales

Behaviorally Anchor Rating Scales(BARS) is a relatively new technique which combines the graphic rating scale and critical incident method. Various performance levels are shown along a scale with each described in terms of employee’s specific job behavior such as good or bad(for e.g. the qualities like inter personal relationships, adaptability and reliability, job knowledge etc).These statements are developed from critical incidents. In this method, an employee’s actual job behavior is judged against the desire behavior by recording and comparing the behavior with BARS. Developing and practicing BARS requires expert knowledge.

Human Resource Accounting Method

Human resources are valuable assets for every organization. Human resource accounting method tries to find the relative worth of these assets in the terms of money. In this method the performance appraisal of the employees is judged in terms of cost and contribution of the employees.

The cost of employees include all the expenses incurred on them like their compensation, recruitment and selection costs, induction and training costs etc whereas their contribution includes the total value added (in money terms).The difference between the cost and the contribution will be the performance of the employees. Ideally, the contribution of the employees should be the greater than the cost incurred on them.

360 degree Performance Appraisals

360 degree evaluators for an employee can be his/her peers, managers, subordinates, team members, customers, suppliers-anyone who come into contact with the employee and can provide valuable insight and information or feedback regarding the "on-the-job" performance of the employees.

360 Degree Performance Appraisal may includes:

1. Self appraisal

2. Superior appraisal

3. Subordinate appraisal

4. Peer appraisal

Self appraisal gives a chance to look at his/her strengths and weaknesses, his achievements and judge his own performance. Superior’s appraisal forms the traditional part of the 360 degree performance appraisal where the employees’ responsibilities and actual performance is rated by the superior.

Subordinates appraisal gives a chance to judge the employee on the parameters like communication and motivating abilities, supervisor’s ability to delegate the work, leadership qualities etc. Also known as internal customers, the correct feedback given by peers can help to find employees’ ability to work in a team, co-operation and sensitivity towards others.

Self assessment is an indispensable part of 360 degree appraisals and therefore 360 degree Performance appraisal have high employee involvement and also have the strongest impact on behavior and performance. It provides a "360-degree review" of the employees’ performance and is considered to be one of the most credible performance appraisal method (Sharma S. et. al(2012).

Management by Objectives (MBO)

This method can be used to measure the performance of employees. The work of (Peter Drucker, 1955) postulate the theory of Management by Objective, by which performance could be measured against goals set by the employees themselves. The objectives or achievements referred to variously as objectives, targets, goals, KRAs or Key Performance Indicators, Work achievement or the Quantity of Work. (Sudarsan, 2009).

Graphic Rating Scale

Here the factors such as quantity of work, quality of work, knowledge of job, attitude, dependability and cooperation are taken.

720 Degree Performance Appraisal

In this method, which tells that in the first appraisal, employee performance is measured, analyzed and targets are set and after a short period his performance is measured again and proper feedback and guidance are given to ensure that the employee achieves the target and this technique is free from personal biases (Anupama et al., 2011).

1.2 Limitations in different Performance Appraisal Techniques:

1. Essay Appraisal Method:

Time consuming.

Effective writers are very difficult to find.

2. Straight Ranking Method:

Suitable for small workforce.

Workers strengths and weakness cannot be easily determined.

3.Paired Comparison Method:

Large number of comparisons required when dealing with many employees.

Suitable for small workforce.

4. Critical Incident Method:

Time consuming and laborious to summarize and analyze the data.

Difficult to convince people to share their critical incidents through a survey.

5. Field Review Method:

The "outsider" may not be aware of the job requirements, work culture and work environment. The outsider has not observed the employee at work and does not know his on-field behavior and performance, except from the report submitted by the employee's supervisor, which may be biased.

Time consuming.

6. Checklist Method:

When the weighted checklist is used, the appraiser has no knowledge of the assigned weights and may give an employee a different evaluation that intended.

7. Assessment Centre Method:

Expensive and difficult to manage.

Requires a large staff.

Requires a great deal of time.

Only a limited number of people can be processed at a time.

Much cognitive loads to assessors.

8. Behaviorally Anchored Rating Scale Method:

Scale independence may not be valid/ reliable.

Behaviors are activity oriented rather than result oriented

Very time consuming for generating BARS.

Each job will require creating separate BARS scale.

9. Human Resource Accounting Method:

There are no specific & clear-cut guidelines for finding cost and value of human resources of an organization.

The method measures only the cost to the organization but ignores completely any measure of the value of the employee to the organization.

The life of human resources is uncertain and therefore, valuing then under uncertainty seems unrealistic.

10. Management by objectives:

Difficult to employees agree on goals.

Misses intangibles like honesty, integrity, quality, etc.

Interpretation of goals may vary from manager to manager, and employee to employee.

Time consuming, complicated, lengthy and expensive.

11. Graphic Rating Scales

Here each characteristic is equally important in evaluation of the employee’s performance.

12. 360 Degree Performance Appraisal:

Time consuming and very costly.

Sensitive to organization and national culture.

Difficult to implement in cross-functional teams.

Maintaining confidentiality may pose challenge in small organizations.

13. 720 Degree Performance Appraisal

Exceptional Expectations for the process.

Insufficient Information.

Design process downfalls

Failure to connect the process.

Insufficient training and process understanding.

Focus on negatives and weaknesses.

Requires commitment of top management and the human resources(time, finance, resources, etc)

Paperwork (computer entry overload).

Rater inexperience and ineffectiveness.

Therefore, the first and most important task in the performance appraisal is assessing the performance of the employees. As, usually, employees are involved in various kinds of activities that directly or indirectly influence the overall performance of an organization, evaluation of performance has never been an easy task. There are two types of measures used in performance appraisal: Objective measures and Subjective measures. Objective measures can easily be drawn into a number like number of projects completed by the employee but here we are considering the Subjective measures that are not directly quantifiable like motivation, leadership, etc.

A lot of research on Performance Appraisal System has been discussed for years; however, many organizations still languish from the uncertainty of measuring the performance of employees. The intention of this analysis is to measure the performance appraisal of employees by fuzzy set theory which will generate the accurate data and with the increase in speed.

The proposed model is supposed to work in two stages: firstly, identifying the critical factors, where all the critical factor directly or indirectly influence the performance of employees and secondly, developing a fuzzy expert system to manipulate those critical factors of employees with the help of fuzzy rule base and hence evaluating the performance of employees. The influential certainty of each feature evaluated from experts is also reveiwed.



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